On the mat

IBISWorld estimates that this industry will grow at an average annual rate of 1.2% over the five year period to 2008-09.

No change in revenue is forecast for 2008-09 due to growth in the office construction market being offset by a downturn in other non-residential markets, as well as the residential market.

Moderate growth occurred in the two years to 2007-08 as the residential market and key areas of the non-residential market expanded. Following robust demand for tiling and carpeting services before the current period, demand softened in the two years to 2005-06, with residential construction falling and weak growth in non-residential construction markets.

Activity in the housing alteration and repair market is estimated to have been partly constrained over the past five years by the growing household preference for timber and rug flooring, and the ongoing trend for skilled labour substitution by “do-it-yourself” homeowners. Over the current period, industry gross operating surplus fell but remained high. Industry employment remained stable.

IBISWorld forecasts this industry will grow at an average annual rate of 4% over the five year period to 2013-14. No change in revenue is expected in 2009-10 as a downturn in non-residential construction offsets an upswing in the residential construction market.

In the remaining four years of the outlook period, strong industry growth is anticipated to stem from expansion of both the residential and non-residential construction markets. Industry gross operating surplus and employment are forecast to grow over the outlook period.

The trend for homeowners to install “do-it-yourself” products is expected to continue and limit demand for this industry’s services. The potential constraint to this industry, of easy entry into the market, may also be beneficial as price competition could see some would-be handymen opt for a skilled tradesmen to do the desired work.

There will also continue to be innovations in the design of carpet and vinyl floor coverings, which could affect demand for tiling services over the outlook period, shifting the balance of industry activity.

Key success factors for operators in the industry

• Ability to effectively manage debtors. Firms must ensure they manage the flow of revenue from work underway and work done.
• Ability to compete on tender. Firms must prove capable of competing in a competitive quoting situation without undercutting “normal” profit levels.
• Having a good reputation. For both tiling and carpeting operators, the quality of tiling or carpeting work provided and the reputation of the operator.
• Having contacts within key markets. For tilers, having a close association with major residential building companies. For carpet layers, having a close relationship with a major carpet retailing firm or specialising in repairs and renovations.
• Ability to expand and curtail operations rapidly in line with market demand. Successful competitors are able to judge cyclical turning points in demand and alter staffing, pricing or marketing accordingly.

Products and service segmentation

Major market segments

BISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au